Democratic socialist Rep. Alexandria Ocasio-Cortez (D-NY) wants to increase the tax rate for the wealthy to 70% for every dollar earned above $10 million. In a different world, that would have been unthinkable, but after decades of misinformation and socialist indoctrination in public schools and the media, new polls show that a majority of Americans support increased taxes on the rich.

In a Fox News poll, 70% of the responders said they supported an increase in tax on those who earn more than $10 million, but the questionnaire did not specify by how much. By contrast, only 13% said they wanted the tax rate to increase for all taxpayers. Only 39% said they wanted no tax increase for anyone.

…great news for Ocasio-Cortez and demarcates an enormous victory for disinformation.

A The Hill/HarrisX Daily Poll gave Ocasio-Cortez even more ammunition for her tax proposal. It asked the question: “Currently the top tax rate is 37 percent. Would you favor or oppose a tax proposal that would apply a 70 percent rate to the 10 millionth dollar and beyond for individuals making $10 million a year or more in reportable income?”

A stunning 59% of registered voters favored the proposal!

This spells great news for Ocasio-Cortez and demarcates an enormous victory for disinformation. It shows that all the conservative and libertarian think tanks, as well as the Republican Party, have utterly failed in conveying the lessons from the Soviet Union and other failed socialist states like North Korea, Cuba, and Venezuela.

Venezuela, Not Scandinavia

Democratic socialist Sen. Bernie Sanders (I-VT) has for a long time pushed the Scandinavian model, and the right has let him get away with this lie. The truth is that the rich do not pay most taxes in Scandinavia. Ordinary working-class and middle-class people finance most of the welfare state with total taxes in excess of 50%.

Scandinavia operates on the participation model: Most people must pay taxes to create a feeling of ownership and responsibility. Scandinavians have skin in the game. This prevents kleptocracy and reduces ethnic and class warfare.

What Sanders and Ocasio-Cortez push in their proposals is the Venezuela model, where the rich pay most of the taxes and most people pay nothing. This creates incentives for freeloaders to leech and vote ethnically or as a special interest group to plunder other people.

It never works. Rich people are the most financially mobile in the world and just move to another country if the taxes get too high. The burden of taxation then falls on an ever-shrinking middle class. The result is collapse – Venezuela style.

In the Fox News poll, only 13% of the responders preferred the Scandinavian model, where all must pay more taxes. Most people opted for Venezuelan kleptocracy. That does not bode well for the land of the free.

Consumption Tax

If people truly wanted to tax the rich, naively a consumption tax would do a better job than increased income tax. If the VAT was increased to, say, 30%, it would really hurt those who spend heaps of money. To make the tax progressive, each American could get an annual consumption tax refund of up to, say, $3,000. Thus, each American citizen could spend up to $10,000 before they would have to pay a net consumption tax.

A rich person who consumes $10 million would then end up paying an additional $3 million in tax, on top of the existing income tax.

There is only one problem with this model: The wealthy would end up paying very little extra. Why? The reason they are rich is because they don’t spend most of their money on consumer goods. In 2014, CNBC reported that of those with a net worth of more than $25 million, less than 20% spent more than $50,000 on a new car. Their major luxury expenditure is vacations. So 60% of them spent more than $10,000 per year on vacations, and 14% of them spent more than $50,000.

That amounts to only a small fraction of their income. They invest most of their money, thereby creating jobs, new technologies, and new industries to the benefit of all.

Politicians or Entrepreneurs

This thought experiment demonstrates that income tax on the rich amounts to taking money away from job creation and entrepreneurship and putting it in the hands of a former bartender from New York who has never created a single job in her entire life. The unspoken premise of the democratic socialists is that they are better at creating value with money than Jeff Bezos, Bill Gates, and Elon Musk.

The big question is: How did all the brains on the right fail to communicate this elementary fact to the American people?

2 Comments

Jules P. Guidry

Great article, Onar. For those of us who knew the facts of the various taxing schemes, it was a good reminder of the reality of taxing the producers. Tax them enough and they quit producing. Then the tax revenue dries up and the leftists can step in and “save” the citizens from the ill effects of the folly of the left. The lessons of NY, CA, IL, and others should serve as a warning to the rest of the ruling elite. But, we all know they don’t learn easily. The response by NY Gov. Cuomo should also remind us how the left reacts when their actions produce undesired(by them) results. Blame someone else for its failure. In this case, Cuomo chose to blame the tax cuts which eliminated the SALT deduction on federal taxes on President Donald J. Trump. The result being folks who pay the big tax bills leaving the state. Just like in CA and other high tax states.
Solution: cut the state taxes and treat the producers like the golden geese they are, at all levels including the everyday citizen taxpayers. Common sense tells everyone this is the way to go. Except for the leftists, of course.
Maybe its just me. Buying more popcorn.

International Correspondent at LibertyNation.com. Onar is a Norwegian author who has written extensively on politics, technology, and science. He has a mathematics and physics background and has been a technological entrepreneur for twenty years, working in areas ranging from biomass gasification and AI to 3D cameras and 3D TV. He is currently also the Editor of the alternative news site Ekte Nyheter (Authentic News) in Norway. Onar is the author of The Climate Bubble (2007) and The Art of War (2008).

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About the author

International Correspondent at LibertyNation.com. Onar is a Norwegian author who has written extensively on politics, technology, and science. He has a mathematics and physics background and has been a technological entrepreneur for twenty years, working in areas ranging from biomass gasification and AI to 3D cameras and 3D TV. He is currently also the Editor of the alternative news site Ekte Nyheter (Authentic News) in Norway. Onar is the author of The Climate Bubble (2007) and The Art of War (2008).